Medium, heavy trucks to grow this year: Tata Motors

Ravindra Pisharody believes medium and heavy commercial vehicles are heading for a gradual turnaround after two years of being in the dumps. “The last 2-3 months have definitely shown some recovery signs in the medium and heavy trucks space. The industry is hoping for at least 15 per cent growth this fiscal,” the Executive Director of Tata Motors’ Commercial Vehicle Business Unit told Auto Focus on Wednesday.

This product category which comprises vehicles of 16 tonnes and above is the bread-and-butter business for companies, fleet operators and dealers. Its numbers crashed by nearly 50 per cent in successive years from a peak of three lakh units in 2011-12. For the April-October period this fiscal, sales of medium and heavy CVs were up by just two per cent to 1.22 lakh units and tipped to gain momentum in the coming months.

“Our business is sentiment-prone and you would never see any segment collapse like this. When things are slowing down, there is fear of overcapacity and truckers just decide not to buy en masse,” Pisharody says.

This was what precisely happened over the last two years though things are a lot better now. For one, the replacement market cycle has been delayed way too long and is now being remedied. Big trucks typically get replaced after 4-5 years. “If operators delay this longer in a market which has collapsed, the resale price comes down. A six-year-old truck gives you much less than a four year-old-vehicle,” Pisharody says.

It is also a welcome sign that diesel prices have fallen and the Government is focusing on reviving economic growth. “Signs are positive but bear in mind this has been a deep recession and coming out of the trough will take time,” the Tata Motors chief cautions.

In addition, the mining issue - a big deal for the CV industry especially in Jharkhand, Goa, Karnataka and Orissa - has to be resolved. Once the definition of illegal mining clearly conveyed, things could look better. And even when mining eventually resumes, the intense demand from China for iron ore will not be there any longer. “It will be a slower growth to recovery for medium and heavy CVs but will take a year longer to hit the peak of 2011-12,” Pisharody says.

R Ramakrishnan, Senior VP, Commercial, says many people have been hurt in this long recession and are justifiably extra cautious now. “We will have to wait for a while before a full fledged recovery happens and the process will happen in phases,” he adds.

Even while this year will be a slight positive for medium and heavy CVs, the small cargo segment will still be in the negative territory. As Ramakrishnan explains, customers of small/light CVs do not have “that kind of capacity” to withstand a recession and bounce back immediately when the cycle is over. The finance community is also wary of them, unlike their heavy vehicle counterparts who they have been familiar with longer. “They are more comfortable lending to them compared to someone who bought his first LCV a couple of years ago,” Ramakrishnan says.

The writer was in Jamshedpur on the invitation of Tata Motors

COMMENT NOW